Northshoring: What’s the deal?

You will have heard of organisations ‘off-shoring’. This relates to the relocation of a business process from one country to another and is usually an action to cut out large costs such as manufacturing. Whilst off-shoring clearly has its monetary benefits it seems off-shoring your business can come with its issues – for example, language barriers and the various negative connotations related to the shift of labour out of the UK. And so, with this in mind, it seems large businesses and organisations alike are approving of a move not ‘off-shore’ but ‘in-shore’: and so the term ‘Northshore’ was coined.

So what exactly is Northshoring?

According to online library Questia, the term was first introduced by consultant Robert Gogel, who described north-shoring as the shift of work from the South to North in order to save money: “Much in the same way that tasks are sent offshore, north-shoring is the practice of moving work to the north where labour and accommodation tends to be cheaper.” And so it seems Northshoring is the solution to many businesses wanting to cut costs but keep their business and employees in the UK.

One of the most popular northern destinations to experience the shift is Manchester, with the likes of communications giants TalkTalk and law firm Freshfields Bruckhaus Deringer which has recently secured an 80,000 sq ft HQ in Salford, Manchester. According to agents, there are several more legal and financial services firms considering moving north. So after a downfall in the number of businesses moving last year, could this be the next Northshoring resurgence?

#RelocateManchester

The ever so popular hashtag ‘RelocateManchester’ came about after Digital Manchester published a report uncovering what it is like to live in the city and work in its thriving digital and technology sector. Managing Director for the company Katie Gallagher said: “As the independent trade association for the digital and technology businesses in the North West we know that the lifestyle here is second to none and that Manchester is home of the most progressive technology companies in the world.

The report found that Manchester’s digital revolution started around a decade ago but has really picked up pace over the past five years. They say that the city is now recognised globally for its digital and technology capability. Some examples of large businesses now calling Manchester home are:

• BBC
• ITV
• AutoTrader
• Sainsbury’s
• TheLadBible
• Bet365
• Boohoo.com
• Missguided
• Rentalcars.com

What will it mean for us and businesses alike

With investment comes opportunity, and as more established businesses have chosen to pinpoint Manchester as a hub, it has in turn attracted forward-thinking, modern businesses to follow suit and help spawn a host of creativity of the city’s own.

The tech scene is one such example. According to a KPMG and MMK Consulting whitepaper in 2016, the region’s tech scene alone has a £2.2 billion output with Manchester ranked in the first position for the cost of doing business. The likes of On the Beach, The Hut Group and Sage have all made their way to the North.

This, in turn, has sparked an array of new entrepreneurs to take their chance and build businesses in the area. The Lad Bible, known throughout social media, was born in Manchester in 2011 and has grown into an internet phenomenon with offshoots like The Sports Bible and The Food Bible. Then there is event ticketing platform Fatsoma, founded by three Manchester students in 2007, which continues to surge; and PushDoctor, a GP on-demand service that has recently secured an $8.2 million funding round.

With a wealth of new businesses comes new jobs and new opportunities – Manchester is no longer seen as the epicentre of the “industrial north”, but now as one of Europe’s true tech capitals.

TalkTalk

As mentioned earlier, communications giants TalkTalk will consolidate its entire North West presence into a total of 126,000 sq ft of space in the Carlyle Group’s Soapworks scheme later this year.

In an interview with the Financial Times, Mr McArthur, Director at TalkTalk, said: “We want to be the first FTSE 100 business in Manchester.” He said cost and hiring pressures were driving businesses elsewhere to look at alternatives to the capital. “Manchester is a good place to hire. It is very efficient. Everybody you employ sees joining the company as the next big step on their journey. People in London always have their CV in the bottom drawer; they see it as a step to somewhere else.”

“With office rents in London now at record high levels, the ‘north-shoring’ effect isn’t going to go away. We estimate that the cost saving per employee for a company considering a move or expansion from central London to Manchester could be as high as £10,000 per person, per annum in property costs, and £10,000 per person, per annum in staff costs.”

Conclusion

In conclusion, Northshoring is an excellent alternative to off-shoring, which only rips valuable enterprise and job opportunities from UK soil. However, to make it succeed, it will need high net worth individuals to see the potential that sits on their own doorstep and to invest accordingly – currently, the bulk of Manchester’s funding comes from outside the region.

In addition, more efforts will need to be made to hang on to what is the largest student population on the continent – and to turn these sharp new minds into the leaders of tomorrow.

Should Manchester, and the North in general, be able to plug the skills gap and develop its pipeline of talent, then there’s nothing to stop it from turning from a tech destination with massive potential, to a thriving reality.

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